House lawmakers told FMC’s proposed OTI regulation 'burdensome'

Tuesday, September 10, 2013

National Customs Brokers and Forwarders Association of America's vice president, Geoffrey C. Powell, told the House Subcommittee on Coast Guard and Maritime Transportation in testimony today that the Federal Maritime Commission’s recent proposal to regulate ocean transportation intermediaries is “inconsistent with the important goals of job creation, improving the national economy, and reducing – not increasing – the burdens of unnecessary regulation.”
Powell explained the agency’s rulemaking resulted from an investigation of the “barrel trade” involving the movement of household goods for individuals. However, the FMC’s proposal focuses on an unrelated issue, the movement of commercial cargo by OTIs. He warned the FMC's initiative “would – if implemented – significantly increase unnecessary burdens and expense on OTIs, raise significant due process concerns and create needless administrative burdens on the agency’s own staff.”
Although the proposition raises a many issues, the NCBFAA finds three areas to be more concerning than others. Namely, the imposition of two-year licenses that require biennial renewals will be burdensome, time-consuming and expensive, Powell said. The FMC’s insistence that the provision will enable it to keep its data current ignores its “existing regulations that already require that those changes must be provided to the FMC as they occur,” he added.
He noted it already takes the FMC two to three months to process licenses and “adding this additional renewal requirement would inundate FMC staff and grind the entire process to a halt."
“A fundamental flaw in the commission’s rulemaking process was its failure to meet with the industry in order to identify and then find solutions that are the least burdensome," Powell said.
“Secondly, without any apparent supporting rationale, the proposal also authorizes suspension or revocation of a license in terms that are vague, overbroad and, in some instances, unreasonable,” he said. “In a related vein, the proposed regulations establish procedures for license revocations which raise due process concerns and are contrary to the U.S. Constitution and the Administrative Procedure Act. The proposal provides for no right of discovery, no apparent right to a hearing, no right to cross-examine witnesses, and no right of appeal from the decision of the designated hearing officer.”
Powell also highlighted in his testimony the FMC proposes to significantly increase ocean forwarder and non-vessel-operating common carrier bonds, although the amounts cited would be insufficient to cover the outstanding claims for the two instances that gave rise to the proposal. He said the proposed increase would not dramatically increase any potential claimant’s level of protection.
“Regrettably, the commission has failed to exercise good judgment in these proposed regulations,” Powell said. “For these reasons, the association respectfully requests that this subcommittee require that the FMC explain why it is proceeding along this path.”